IRS Receives Approval to Hire Private Debt Collectors

The Internal Revenue Service plans to hire private collectors to go after about $13 billion in unpaid taxes, a Republican House aide told Dow Jones Newswires.

House and Senate negotiators on Friday gave the IRS the OK to hire private debt collectors, the aide was reported as saying. A measure that would block the private debt collection project was dropped from a year-end spending bill.

U.S. Rep. Shelley Moore Capito, a Republican from West Virginia, had sponsored the measure, which would stop the Treasury from using any money "to plan, enter into, implement, or provide oversight of contracts" for any private collection practices.

Kelley said an IRS private debt collection pilot project was such as disaster in 1996 that it was canceled a year later.

IRS Commissioner Mark Everson has said that privacy protections have improved, and giving IRS the authority to hire private contractors will help “ensure all taxpayers pay their fair share.” Private debt collection was approved as part of the "American Jobs Creation Act," a major tax bill President George W. Bush signed last month.